Company could save $16 million in taxes without city-issued bonds

Nov. 12, 2012

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In December 2011, the Springfield City Council gave preliminary approval to a tax incentive plan meant to spur redevelopment of the vacant Solo Cup facility on North Glenstone Avenue.

Almost a year later, owner Warren Davis Properties is back with a streamlined financing plan that will cut taxes on the $24 million renovation without the need for city-issued bonds that were part of the earlier proposal.

“It’s actually cheaper for them ... and a lot less complicated,” said Economic Development Director Mary Lilly Smith.

The proposal, slated for a public hearing when City Council meets Nov. 19, would reduce the property taxes Davis pays for up to 25 years.

For the first 10, the value of the property will be frozen at a level before any improvements are made. For 15 years after that, Warren Davis will pay taxes on just half of the increase in value.

In all, the tax breaks are expected to save the company more than $16 million in property taxes during the period, according to estimates included in the application.

Still, Warren Davis calculates that the city, public school district and other taxing districts will collect about $4.3 million more in taxes than they would if the redevelopment did not occur.

The plan pitched in December — which required the city to issue bonds that Warren Davis would have bought and paid back — would have granted similar property tax breaks, as well as 50 percent tax abatement on major equipment purchased by future tenants.

Smith said tenants still could seek those benefits, but the simpler tax abatement plan will allow Davis to move ahead with the renovation.

Davis bought the Solo Cup facility in late 2010 for a reported $7.9 million.

In addition to the vacant 735,000-square-foot plant at 1100 N. Glenstone Ave., the company owns two adjacent warehouses — currently occupied by SRC and John Deere Regen — that add another 638,000 square feet to total space on the property.

The first two phases of the redevelopment project, which could start this year, include gutting the former Solo Cup facility as well as renovating and expanding the 230,000-square-foot warehouse to the south that faces Chestnut Expressway.

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A third phase, slated for 2013-2018, would be completed as needed to partition and equip parts of the Solo Cup building for new manufacturing or office tenants, possibly including data or call centers.

Counting more than $12 million in acquisition costs, Davis’ application to City Council estimates a total investment of more than $36.5 million.

Tax breaks for Vandivort Center?

As Warren Davis opts to forgo the more complex, bond-financed tax abatement, the new owners of the Vandivort Center are asking City Council to approve a similar plan as they seek to redevelop the downtown structure into a 45-room hotel.

Smith said the decision to apply for the bond-backed tax breaks was made because the Vandivort — a former Masonic Lodge — received a more common form of tax abatement when it was renovated into an office building in the 1980s.

Although the earlier property tax incentives have expired, the earlier redevelopment — meant to remove urban blight — means it is difficult to say the building is in dire condition now.

“It’s deteriorated and it’s functionally obsolete, but whether you can make the case it’s blighted is arguable,” Smith said.

Unlike more common forms of tax abatement, the bond-backed incentive plan being considered doesn’t require a finding of blight, she said, but could reduce property taxes at the site up to 25 years.

A resolution asking for City Council’s preliminary approval of the plan is scheduled for public hearing Nov. 19.

Non-discrimination task force

Want advance notice of topics slated for City Council’s review? The city now is posting a six-month planning calendar containing likely agenda items.
Accessible from City Council’s agenda page at www.springfieldmo.gov, the draft calendar includes items expected to go to a public hearing or vote at the next several meetings as well as a longer-range schedule for known items like the city budget.
Among the items listed for council’s Nov. 19 meeting is a resolution creating a Sexual Orientation/Gender Identity Task Force that would continue discussion of the controversial non-discrimination bill City Council tabled in August.
Mayor Bob Stephens said the proposed task force is modeled after a similar group that studied the city’s police-fire pension plan in 2009.
Stephens said the resolution, as written, would create a group with 15 voting members and non-voting chair, “whose job is to keep the process moving forward.”
The resolution, which lays out tentative goals and a time line for the group’s work, calls for each council member to nominate one person to serve on the task force, Stephens said.
Another six will be drawn from the community at-large, he said, after being selected from a pool of applicants by council’s Public Involvement Committee. Stephens would choose the non-voting chair.